Corporate philanthropy: good for the soul — and your bottom line

As I’ve been preparing for Geek 2 Chic, a charity event that will bring together over 25 Bay Area companies and universities to benefit the Network for Teaching Entrepreneurship, I got to thinking about the role corporate citizenship plays in companies large and small – and how there are certain universal principles that can be applied regardless of company size.

A recent study from the Reputation Institute shows that increasing local community engagement is one of the most effective means by which a company can improve its overall reputation and, ultimately, bottom line. For those of us in the field of corporate philanthropy this research comes as no surprise. We see a myriad of examples of how companies do well by doing good. It is high time for people to stop thinking of these values (philanthropy versus profit) as competing or mutually exclusive. In fact, they are often symbiotic.

According to the Reputation Institute study, positive perception of philanthropy and corporate citizenship initiatives is directly correlated with overall business value. A ten percent improvement in perceived corporate citizenship, the study showed, can translate to an 11 percent improvement in overall reputation, and up to a 14 percent improvement in a company’s market value.

Let me be clear that I’m not advocating that companies do philanthropy because it will better their brand or increase their profits. Rather, all companies should work to address their community’s social problems because the companies are, in fact, important and influential members of that community. A company’s employees, customers, services and products impact that community in both positive and negative ways. Solving social issues in any community is done best through cross-sector partnerships and companies should strive to be part of the solution. The fact that these engagements can lead to positive business growth is great, but it should not be the driving factor.

How should companies structure their community engagement programs? What are the keys to effectiveness? What are the metrics for success? A company’s approach will vary greatly based on its size, culture, location, employee base, industry and so forth, but here are a few commonalities among successful corporate citizenship initiatives:

Create programs that are aligned with your business. A technology company, for instance, will likely want to focus on philanthropic or volunteer opportunities that promote science, technology, engineering and math (STEM). It’s thus no surprise that companies in Silicon Valley are known in part for their dedicated corporate citizenship initiatives that foster STEM-centric initiatives.

Microsoft also employs a similar approach as part of its broader corporate citizenship program, via its YouthSpark campaign – which promotes greater access to education and employment for young people. One such YouthSpark partner is the Network for Teaching Entrepreneurship (NFTE), an organization that provides training programs to help at-risk youth recognize business opportunities and plan for successful futures.

Focus both inside and outside of your company. Corporate social responsibility (CSR) is a growing field as all companies realize it’s important to act in a way that is socially responsibility. Whether it be privacy policies, environmentalism, ethics, supply chain, human rights, or good governance, it is critical that companies take meaningful action in this field.

Missteps can have a major, long-term brand impact – just ask BP, which was perhaps the poster child for ineffective CSR in the wake of the Deepwater Horizon catastrophe in 2010. Conversely, companies like The Body Shop and Nike have experienced extremely positive impacts on their respective brands in recent years because of engaging, proactive CSR campaigns.

Engage and leverage your employees, customers and partners. The best way to encourage volunteerism and employee giving is to develop a culture of proactive giving from the top down. Ideally, companies should balance efforts between a focus area and actively encouraging employees to follow their own passions.

Establish deep and meaningful partnerships with causes. Look to take an active and transparent role in maximizing your company’s interaction with – and understanding of – a given initiative. Rather than passively handing out grants to check off an obligatory philanthropy box, focus on actively engaging with an organization to build an impactful, long-term partnership. Take an active role in developing the policy that dictates the relationship. Help with product gifts, volunteerism, employee giving, event hosting, and visibility opportunities (to name a few) to ensure that yours is a fruitful partnership.

Do something different. Be innovative. Have fun. This is important work, but it should also be fun. Be creative and strive to think outside the box in developing corporate citizenship initiatives.

On a final note, if you’ll be in the San Francisco Bay Area on May 15, please do consider joining us at Bloomingdale’s in downtown San Francisco for Geek 2 Chic, a self-proclaimed “geek fashion show” – for which 100% of proceeds will benefit the Network for Teaching Entrepreneurship.